Hedge Fund Risk Management

ABSTRACT

A computerized method and system for managing risk associated with a Hedge Fund is disclosed. Information relating to Hedge Funds is gathered and stored as data in preparation for a risk inquiry search relating to a Hedge Fund. Documents and sources of information can also be stored. A subscriber, such as a Financial Institution, can submit a Hedge Fund descriptor for which a risk inquiry search can be performed. The risk assessment or inquiry search can include data retrieved resultant to augmented retrieval methods. Scrubbed data as well as augmented data can be transmitted from a risk management clearinghouse to a subscriber or to a proprietary risk system utilized by a subscriber, such as a risk management system maintained in-house. Risk inquiry searches can be automated and made a part of standard operating procedure for any transaction conducted by the subscriber in which a Hedge Fund is involved.

CROSS REFERENCE TO RELATED APPLICATIONS

This application claims the benefit of the filing date of U.S.Provisional application No. 60/390,296 entitled “Hedge Fund RiskManagement”, filed Jun. 20, 2002. This application is acontinuation-in-part of a prior application entitled “Risk ManagementClearinghouse”, filed Feb. 12, 2002, and bearing the Ser. No. 10/074,584which is a continuation-in-part of a prior application also entitled“Risk Management Clearinghouse” filed Oct. 30, 2001, and bearing theSer. No. 10/021,124, which is also a continuation-in-part of a priorapplication entitled “Automated Global Risk Management” filed Mar. 20,2001, and bearing the Ser. No. 09/812,627, all of which are relied uponand incorporated by reference.

BACKGROUND

This invention relates generally to a method and system for facilitatingthe identification, investigation, assessment and management of legal,regulatory financial, market, credit, operations and reputational risks(“Risks”). In particular, the present invention relates to acomputerized system and method for banks and non-bank financialinstitutions to access information compiled on a worldwide basis andrelate such information to a Hedge Fund, wherein the information isconducive to quantifying and managing Risks associated with the hedgefund.

Although the term “hedge fund” may not be strictly defined by governmentstatute, over time, the term generally refers to a variety of pooledinvestment vehicles that are not registered under the federal securitieslaws as public corporations, investment companies, or broker-dealers.

As money-laundering and related concerns have become increasinglyimportant public policy concerns, regulators have attempted to addressthese issues by imposing increasing formal and informal obligations uponfinancial institutions, including hedge funds. Government regulationsauthorize a broad regime of record-keeping and regulatory reportingobligations on covered financial institutions as a tool for the federalgovernment to use to fight drug trafficking, money laundering, and othercrimes. The regulations may require financial institutions to filecurrency and monetary instrument reports and to maintain certain recordsfor possible use in tax, criminal and regulatory proceedings. Such abody of regulation is designed chiefly to assist law enforcementauthorities in detecting when criminals are using banks and otherfinancial institutions as intermediaries for, or to hide the transfer offunds derived from, criminal activity.

Obligations include those imposed by the Department of the Treasury andthe federal banking regulators which adopted suspicious activity report(“SAR”) regulations. These SAR regulations require that financialinstitutions file SARs whenever an institution detects a known orsuspected violation of federal law, or a suspicious transaction relatedto a money laundering activity or a violation of the Bank Secrecy Act(BSA). The regulations can impose a variety of reporting obligations onfinancial institutions.

Perhaps most broadly relevant for the present invention, currentregulations require an institution to report transactions aggregating to$5,000 that involve potential money laundering or violations if theinstitution, knows, suspects, or has reason to suspect that thetransaction involves funds from illegal activities, is designed todisguise such funds, has no business or legitimate purpose, or is simplynot the sort of transaction in which the particular customer wouldnormally be expected to engage, and the institution knows of noreasonable explanation for the transaction after examining the availablefacts.

Federal regulators have made clear that the practical effect of theserequirements is that financial institutions are subject to significantobligations to “know” their customer and to engage in adequatemonitoring of transactions.

The Securities and Exchange Commission (SEC) typically will receivelimited information regarding the activities of various large marketparticipants, including some hedge funds, through reports that are filedwhen they acquire 5% or more of a class of security issued by a publiclytraded company. The SEC will also receive limited information abouthedge funds through reports filed by managers exercising investmentdiscretion over accounts having $100 million or more in equitysecurities. This information, however, does not reveal much detail aboutthe trading activities of Hedge Funds and other large participants inour markets. In addition, the limited partnership structure of a hedgefund can make it more difficult to ascertain who the ultimate “customer”of a financial institution is.

Risk associated with a transaction involving a hedge fund can beincreased due to the difficulty in gathering and accessing pertinentdata on a basis timely to managing risk associated with the transaction.As part of due diligence associated with performing financial, it isimperative for a financial institution to “Know Their Customer”including whether a customer is contained on a list of restrictedentities published by the Office of Foreign Access Control (OFAC), theTreasury Office or other government or industry organization. The amountof information that needs to be considered to evaluate whether an entityposes a significant risk or should otherwise be restricted, issubstantial.

What is needed is a method and system to draw upon information gatheredglobally that relates to hedge funds and the partners associated with afund. The information can be utilized to assist with risk management anddue diligence related to a financial transaction involving a hedge fund.A new method and system should anticipate scrubbing data from multiplesources in order to facilitate merging data from all necessary sources.In addition, data mining should be made available to ascertain patternsor anomalies in the query results. Risk information should also besituated to be conveyed to a compliance department and be able todemonstrate to regulators that a financial institution has met standardsrelating to risk containment.

SUMMARY

Accordingly, the present invention provides a method for managing riskassociated with Hedge Funds. In particular, the present inventionincludes gathering data relevant to Hedge Funds from multiple sourcesand aggregating the data gathered according to risk variables. Aninquiry relating to a Hedge Fund can be received and portions of theaggregated data can be associated with risk variables related to theHedge Fund. A risk variable can include, for example, a sponsor of aHedge Fund, investments made by the Hedge Fund, partners involved in theHedge Fund, a domicile of the Hedge Fund, a chief place of operation ofthe Hedge Fund, whether the Hedge Fund is available to U.S. citizens, orother factors. The associated portions of the aggregated data can thenbe transmitted, such as for example, to a subscriber or a riskmanagement clearinghouse.

In some embodiments, data can be gathered exclusively from publiclyavailable sources. An inquiry can be related, for example, to: a sponsorof the Hedge Fund; a partner of a Hedge Fund; a domicile of the HedgeFund; investments made by the Hedge Fund; a commodity pool operator asdefined in the Commodity Exchange Act; hedge Fund window dressing; HedgeFund portfolio pumping; a lockup provision; an alert list; or other risksubject or risk subject variable.

Embodiments can also include conditioning transmission of associatedportions of the aggregated data upon receipt of a contractualobligation, such as, for example, contractual obligation not to use theassociated portions of the aggregated data for any purpose covered bythe Fair Credit Reporting Act or for contractual obligation.

Similarly, embodiments can include transmitting associated portions ofthe aggregated data in response to specified conditions being met, suchas, for example: transmitting exclusively to an institution, such thatthe transmitter will have neither customers nor consumers as defined inthe Gramm-Leach—Bliley Act; limiting use of the aggregated data forcomplying with regulatory and legal obligations associated with at leastone of: (i) the detection and prevention of money laundering, (ii)fraud, (iii) corrupt practices, (iv) organized crime, and (v) activitiessubject to government sanctions or embargoes; transmitting theassociated portions of the aggregated data conditioned upon receipt of acontractual obligation to limit use of the aggregated data for at leastone of: (i) the prevention or detection of a crime, (ii) theapprehension or prosecution of offenders, and (iii) the assessment orcollection of a tax or duty; or other condition. In addition, someembodiments can include gathered data relevant to a Hedge Fund whichaccurately reports on or consists of a governmental record or of insuresthat the source of gathered data is reputable.

In another aspect, the aggregated data can be continually monitored andany new information related the Hedge Fund transmitted to apredetermined destination.

Other aspects can include gathering data relevant to a Hedge Fund frommultiple sources and aggregating the data gathered according to riskvariables. An inquiry relating to the Hedge Fund can be receivedassociating portions of the aggregated data with the Hedge Fund andtransmitting the portions of the aggregated data associated with theHedge Fund according to the inquiry. Embodiments can also includeenhancing and/or scrubbing the data, such as, for example, incorporatingchanges in the spelling of datum or utilizing an index file. Similarly,some embodiments can include augmenting associated portions ofaggregated data, such as through data mining.

Associating aggregated data can include, for example: using Booleanlogic or relevance ranking.

Some embodiments can include receiving a source of gathered data andtransmitting the source of the associated portions of aggregated dataalong with other search results.

Other embodiments of the present invention can include a computerizedsystem, executable software, or a data signal implementing the inventivemethods of the present invention. The computer server can be accessedvia a network access device, such as a computer. Similarly, the datasignal can be operative with a computing device, and computer code canbe embodied on a computer readable medium.

In another aspect, the present invention can include a method and systemfor a user to interact with a network access device so as to manage riskrelating to a risk subject. The user can initiate interaction with aproprietary risk management server via a communications network andinput information relating to details of the risk subject, such as, forexample, via a graphical user interface, and receive back informationrelated to the risk subject.

Various features and embodiments are further described in the followingfigures, drawings and claims.

DESCRIPTION OF THE DRAWINGS

FIG. 1 illustrates a block diagram that can embody this invention.

FIG. 2 illustrates a network of computer systems that can embody anautomated Hedge Fund risk management system.

FIG. 3 illustrates a flow of exemplary steps that can be executed by asystem implementing the present invention.

FIG. 4 illustrates a flow of exemplary steps that can be executed by asystem to implement augmented data.

FIG. 5 illustrates a flow of exemplary steps that can taken by a user ofthe Hedge Fund risk management system.

DETAILED DESCRIPTION

The present invention includes a computerized method and system formanaging risk associated with a Hedge Fund. The computerized systemgathers and stores information as data in a database, or other datastoring structure, and processes the data in preparation for a riskinquiry search relating to a Hedge Fund. An inquiry will relate to aRisk Variable, such as, for example, a principal of the Hedge Fund.Documents and sources of information can also be stored and retrievedvia the inquiry. A subscriber, such as a Financial Institution, cansubmit a Hedge Fund descriptor for which a risk inquiry search can beperformed. A risk assessment or inquiry search is performed relating tothe descriptor and can include data retrieved resultant to augmentedretrieval methods. Scrubbed data as well as augmented data can betransmitted from a risk management clearinghouse (RMC) to a subscriberor to a proprietary risk system utilized by a subscriber, such as a riskmanagement system maintained in-house. In some embodiments, a Riskinquiry search can be automated and made a part of standard operatingprocedure for any transaction conducted by the subscriber in which aHedge Fund is involved.

DEFINITIONS

Financial Institution: Financial Institution refers to any person,entity, company, corporation or statutory “person” in the business ofproviding Financial Transactions. As such, as used herein, a FinancialInstitution can collectively and individually include: Bank and non-bankfinancial institutions, including: investment banks; merchant banks;commercial banks; securities firms, including broker dealers securitiesand commodities trading firms; asset management companies, other hedgefunds, mutual funds, credit rating funds, securities exchanges andbourses, institutional and individual investors, law firms, accountingfirms, auditing firms, any institution the business of which is engagingin financial activities as described in section 4(k) of the Bank HoldingAct of 1956, and other entities subject to legal and regulatorycompliance obligations with respect to money laundering, fraud,corruption, terrorism, organized crime, regulatory and suspiciousactivity reporting, sanctions, embargoes and other regulatory risks andassociated obligations.

Financial Transaction: a Financial transaction refers to any action thatanticipates a transfer of money from a first set of one or moreTransaction Participants to a second set of one or more TransactionParticipants. Examples of Financial Transactions can include: investmentand merchant banking, public and private financing, commodities and asecurities trading, commercial and consumer lending, asset management,rating of corporations and securities, public and private equityinvestment, public and private fixed income investment, listing tocompanies on a securities exchange and bourse, employee screening,auditing of corporate or other entities, legal opinions relating to acorporate or other entity, or other business related transactions.

Hedge Fund: As used herein, a Hedge Fund will include limitedpartnerships, including foreign limited partnerships or other vehicle toprovide pass-through tax treatment of investor earnings. When organizedabroad, Hedge Funds are usually structured to avoid U.S. taxation of theearnings of foreign investors. A U.S. Hedge Fund will include a privatelimited partnership. Often a U.S. Hedge Fund will have 99 or fewerlimited partners.

To maximize flexibility, Hedge Funds operating in the U.S. may bestructured so that the fund will be exempt from regulation under theInvestment Company Act of 1940. A Hedge Fund may also rely on the traderexception from broker-dealer registration. In addition, interests inHedge Funds can be and typically are, sold privately to sophisticated,high net worth individuals to avoid registration of the interests underthe Securities Act of 1933, other traditional customers of Hedge Fundscan include institutions, endowments and foundations.

Like other market participants, such as securities firms, banks, andinsurance companies, Hedge Funds can vary widely in size, tradingstrategies, degrees of leverage, and market influence. An active HedgeFund may trade a broad range of financial products, including equities,U.S. and foreign government securities, commodities, financial futures,options, foreign currencies, and derivatives. A Hedge Fund may alsoparticipate in merger and acquisition investments and various forms ofdirect investment activity around the internationally.

Hedge Fund Sponsor: A sponsor of a Hedge Fund is a person responsiblefor managing the investments of the Hedge Fund. The limited partners'investments are pooled and managed by a general partner or sponsor thatis also typically an investor. A sponsor may be registered as aninvestment adviser under the federal securities laws, but is not sorequired. As compensation, a sponsor will typically receive a managementor administrative fee based on the amount of a fund's assets, togetherwith an allocation based on the fund's investment performance, such as ashare of profits. Typically, the sponsor does not share responsibilityto any losses incurred by the fund.

Informational Artifact: Informational Artifact refers to a media itemthat contains information that can be interpreted into a humanlyascertainable form. Examples of Informational Artifacts include: a newsarticle, a news feed portion, a video segment, a newscast, a report, anidentifiable document, an agency listing, a list, a governmentpublication, other identifiable publication, a sound byte, a soundrecording, or other media item.

Risks: Risks associated with a financial transaction can include factorsassociated with security risk, financial risk, legal risk, regulatoryrisk and reputational risk. A Security Risk refers to breach of a safetymeasure that may result in unauthorized access to a facility;unauthorized access to data; physical harm, including threat ofimmediate risk of harm to a person or goods. Financial Risk refers tofactors indicative of monetary costs that the Risk Bearing Institutionor a Transaction Participant may be exposed to as a result of aparticular Financial Transaction. Monetary costs can be related tofines, forfeitures, costs to defend an adverse position, lost revenue,or other related potential sources of expense. Regulatory Risk refers tofactors that may cause the Risk Bearing Institution or TransactionParticipant to be in violation of rules put forth by a government entityor regulatory agency. Reputational risk relates to harm that a RiskBearing Institution or Transaction Participant may suffer regarding itsprofessional standing in an industry or the public eye. A Risk BearingInstitution and Transaction Participant can suffer from being associatedwith a situation that may be interpreted as contrary to an image ofdiligence, honesty and forthrightness.

Risks may be related to the duty to disclose material information, toreport and possibly prevent: fraud, money laundering, foreign corruptpractices, bribery, embargoes and sanctions. Timely access to relevantdata on which to base a regulatory or reputational Risk related actioncan be critical to conducting business and comply with regulatoryrequirements such as those set forth by the Patriot Act in the UnitedStates.

Risk Management Clearinghouse (RMC): RMC refers to computerized systemsand methods for managing Risks and associating information and/orinformational artifacts useful for quantifying Risk with a Risk subject,as more fully described in the related patent applications: Ser. No.10/074,584 entitled “Risk Management Clearinghouse” filed Feb. 12, 2002,and U.S. patent application Ser. No. 10/021,124 entitled “RiskManagement Clearinghouse” filed Oct. 30, 2001.

Risk Quotient: Risk Quotient refers to a quantitative value of an amountof Risk, a Risk Quotient can be based upon a weighted algorithm appliedto the Risk criteria and informational artifacts.

Subscriber: Subscriber refers to any person or entity authorized toaccess an RMC system 106.

Transaction Participant: Transaction Participant refers to a person whowill partake in a Financial transaction.

Referring now to FIG. 1 a block diagram of some embodiments of thepresent invention is illustrated. An RMC system 106 gathers and receivesinformation which may be related to risk variables in a Hedge Fund.Information may be received, for example, from publicly available orprivate sources, including, for example: the Office of Foreign AccessControl (OFAC) 101, the U.S. Commerce Department List 102, the U.S.White House List 103, a Foreign Counterpart list 104, a List of U.S.Federal Regulatory Actions 105, EDGAR 113, the SEC 114, CommoditiesFutures Trading Corp. (CTFC) 115, North American SecuritiesAdministrators Association (NASAA) 116, National White Collar CrimeCenter (NW3C) 116, a state or federal attorney general's office 117, asubscriber 111, investigation entity 119, or other source, such as aforeign government, U.S. adverse business-related media reports, U.S.state regulatory enforcement actions, international regulatoryenforcement actions, international adverse business-related mediareports, a list of politically connected individuals and militaryleaders, list of U.S. and international organized crime members andaffiliates, a list put forth by the Financial Action Task Force (FATF),a list of recognized high risk countries, or other source of high riskvariables. Court records or other references relating to fraud,bankruptcy, professional reprimand or a rescission of a right topractice, suspension from professional ranks, disbarment, prison recordsor other source of suspect behavior can also be an important source ofinformation.

The information received can be constantly updated and can be related toa Hedge Fund or an alert list related to a Hedge Fund, in order tofacilitate risk management and/or compliance with regulatoryrequirements. The RMC system 106 can facilitate due diligence on thepart of a subscriber 111 by gathering, structuring and providing to thesubscriber 111 data that relates to risk variables involved in a HedgeFund.

A risk variable can include any datum associated with a specified HedgeFund that can cause a risk level relating to the specified Hedge Fund tochange. A Financial Institution may have an obligation to relate suchvariables to suspicious activity and also to know their customers. AnRMC system 106 can compare and relate received information associatedwith a Hedge Fund with information from government sources, and thelike, identifying high risk individuals, entities or organizations.

For example, a Financial Institution may request information on a HedgeFund that has requested that the Financial Institution execute aparticular transaction. The Financial Institution may submit an inquiryrequesting information related to risk variables such as, who isassociated with the Hedge Fund, the source of the Hedge Fund'sinvestment, the Hedge Fund's manager or other related information. Inaddition, the Financial Institution may need to know if any of theparties or jurisdictions associated with the Hedge Fund is included onany list issued by the government relating to high risk activity. It mayalso be useful to ascertain whether a fund manager is a commodity pooloperator. A commodity pool operator as defined by the Commodity ExchangeAct can include a person engaged in the business of soliciting oraccepting funds from others for the purpose of trading commodity futurescontracts in connection with a commodity pool.

Other risk variables can include, for exemplary purposes, a sovereignstate involved, a geographic area, a shell bank, a correspondentaccount, a political figure, a person close to a political figure, ahistory of fraud, embargoes, sanctions, or other factors, such as abeneficiary of a partner in the Hedge Fund. Additional variables caninclude statements relating to Net Asset Value (NAV) that may be issuedmonthly or quarterly. The RMC system 106 may track statements of the NAVfor a fund and highlight anomalies or trends, or sudden increases ordecreases in value. It may also be useful to ascertain how heavilyleveraged a Hedge Fund may be, as well as whether an amount of leverageis typical for particular Hedge Fund or shows a trend of increasingleverage or decreasing leverage. Typically, a Hedge Fund can require asubstantial time commitment for funds invested in the fund, such as from1 to 5 years, this type of commitment can be conducive to a staticpartnership which in turn can facilitate efforts to gather informationrelated to the fund.

Hedge funds are inherently private investment vehicles and therefore itis sometimes difficult to obtain information on a level of detail thatis equivalent to the amount of information that is available relating totraditional institutions. However, if it is available, other informationthat may be important relating to risk associated with a Hedge Fund caninclude the types of investments made by the Hedge Fund, as well aswhether there is a change in the types of investments made by the HedgeFund.

For example, a Hedge Fund may be involved in portfolio pumping which caninclude the practice of increasing a fund's stake in portfoliosecurities at the end of a financial period solely for the purpose offraudulently driving up the NAV of the fund. An investment manager may,for example, manipulate the value of common stocks of an over thecounter bulletin board company in which the Hedge Fund held an interestat the end of each month for a period of time. The investment managercan cause fund redemptions to be made at inflated values for themanager's benefit and to the detriment of a Hedge Fund's otherinvestors.

Another practice that a RMC system 106 can attempt to provideinformation on can include “window dressing”. With window dressing, afund manager or advisor can buy or sell portfolio securities at the endof a reporting period for the purpose of misleading investors as to thesecurities held by an associated Hedge Fund, and/or the strategiesengaged in by the advisers or the source of the fund's performance. Forexample, an advisor may cause a Hedge Fund to hold significant positionsin securities that are not permitted under the Hedge Fund's disclosedinvestment objectives. As a reporting period draws near, the adviserliquidates these positions to come into compliance with its statedobjectives. Investors can be misled if they are told that the fund isinvesting consistent with prospectus disclosure when it is not.

Window dressing may also occur when an adviser replaces investments inotherwise permissible securities with investments in high performersjust before the end of a reporting period to make it appear as thoughtthe adviser had a winning hand.

Some embodiments can include a RMC system 106 performing a certificationthat a risk inquiry has been conducted relating to all known relatedparties and other risk factors. Inquiry criteria can be listed for theperusal and records of a subscriber interested. A certification caninclude transmitting to a subscriber any related informational data,informational artifacts or other materials discovered as a result of theinquiry. Embodiments can also include transmitting informational dataand artifacts relating to a Hedge Fund risk inquiry without associatingthe informational data or artifacts with a risk quotient or any othervalue judgment or other rating. As such, still other embodiments caninclude a risk quotient, value judgement or other rating to provide asubjective quantification of the amount of risk involved in dealing witha subject Hedge Fund.

In some embodiments, and for example, if permissible under prevailinglaw, a subscriber can input or otherwise provide to an RMC system 106information relating to a Hedge Fund. Provider supplied information caninclude information gathered according to normal course of dealings witha particular hedger fund or discovered via investigation. In addition,in accordance with prevailing law, a financial institution may discoveror suspect that a person or entity related to a Hedge Fund is involvedin some fraudulent or otherwise illegal activity and report thisinformation to the RMC system 106, as well as an appropriate authority.

A decision by a financial institution concerning whether to pursue atransaction involving a Hedge Fund can be dependent upon many riskvariables. A multitude and diversity of risks related to the variablesmay need to be identified and evaluated. In addition, the weight andcommercial implications of each variable and associated Risks can beinterrelated.

Information gathered from the diversity of data sources can beaggregated into a searchable data storage structure 108. A source ofinformation can also be received and stored. In some instances asubscriber 111 may wish to receive information regarding the source ofinformation received. Gathering data into an aggregate data structure108, such as a data warehouse allows a RMC system 106 to have the data108 readily available for processing a risk management search associatedwith a risk subject. Aggregated data 108 can also be scrubbed orotherwise enhanced.

In some embodiments involving enhancing data, data scrubbing can beutilized to implement a data warehouse comprising the aggregate datastructure 108. Data scrubbing can take information from multipledatabases or other sources and store it in a manner that providesefficient access to key portions. Scrubbing can facilitate expedientaccess to accurate data commensurate with the critical businessdecisions that will be based upon the risk management assessmentprovided.

Various data scrubbing routines can be utilized to facilitateaggregation of risk variable related information. The routines caninclude programs capable of correcting a specific type of mistake, suchas an incomprehensible address, or clean up a full spectrum of commonlyfound database flaws, such as field alignment that can pick up misplaceddata and move it to a correct field or removing inconsistencies andinaccuracies from like data. Other scrubbing routines can be directeddirectly towards specific legal issues, such as money laundering orterrorist tracking activities.

For example, a scrubbing routine can be used to facilitate variousdifferent spellings of a word or phrase. In particular, spelling ofnames can be important when names have been translated from a foreignlanguage into English. For example, some languages and alphabets, suchas Arabic, may have no vowels. Translations from Arabic to English canbe very important for financial institutions seeking to be in compliancewith lists supplied by the U.S. government that relate to terroristactivity and/or money laundering. A data scrubbing routine canfacilitate risk variable searching for multiple spellings of anequivalent name or other important information. Such a routine canenhance the value of aggregate data gathered and also help correctdatabase flaws. Scrubbing routines can improve and expand data qualitymore efficiently than manual mending and also allow a subscriber 111 toquantify best practices for regulatory purposes.

Retrieving information related to risk variables from aggregated data isan operation with the goal to fulfill a given a request. In order toprocess a request against a large document set of aggregated risk datawith a response time acceptable to the user, it may be necessary toutilize an index based approach to facilitate acceptable response times.A direct string comparison based search may be unsuitable for the task.

An index file for a collection of documents can therefore be built uponreceipt of the new data and prior to a query or other request. The indexfile can include a pointer to a document and also include importantinformation contained in documents the index points to. At query time,the RMC system 106 can match the query against a representation of thedocuments, instead of the documents themselves. The RMC system 106 canretrieve the documents referenced by the indexes that satisfy therequest if the subscriber submits such a request. However it may not benecessary to retrieve the full document as index records may alsocontain the relevant information gleaned from the documents they pointto. Efficiency can be increased as the user is allowed to extractinformation of interest without having to read the source document.

At least two exemplary retrieval models can be utilized in fulfilling asearch request. One retrieval model can include Boolean retrieval inwhich a document set is partitioned in two disjoint parts with onefulfilling a query and one not fulfilling it. A second retrieval modelcan include relevance ranking in which all the documents are consideredrelevant to a certain degree. Boolean logic models use exact matching,while relevance ranking models use fuzzy logic, vector space techniques,such as a technique wherein documents and the query are consideredvectors in a multidimensional space, a shorter distance between adocument vector and the query vector indicates increased relevance forthe document, neural networks, and probabilistic schema.

Augmenting data can include data mining techniques that use software toanalyze and sift through the aggregated data stored in the warehouseutilizing techniques such as mathematical modeling, statisticalanalysis, pattern recognition, rule based trends or other data analysistools. In contrast to traditional systems that may have gathered andstored information in a flat file and regurgitated the storedinformation when requested, such as in a defined report related to aspecific risk subject or other ad hoc access concerned with a particularquery at hand, the present invention can provide risk related searchingthat adds a discovery dimension by returning results that human operatorwould find very labor and cognitively intense.

This discovery dimension supplied by the RMC system 106 can beaccomplished through the application of augmenting techniques, such asdata mining applied to the risk related data that has been aggregated.Data mining can include the extraction of implicit, previously unknownand potentially useful information from the aggregated data. This typeof extraction can include unlooked for correlations, patterns or trends.Other techniques that can be applied can include fuzzy logic and/orinductive reasoning tools.

For example, augmenting routines can include enhancing available datawith routines designed to reveal hidden data. Revealing hidden data oradding data fields derived from existing data can be very useful to riskmanagement. For example, supplied data may not include an address for aperson involved in a Hedge Fund; however a known telephone number isavailable. Augmented data can include associating the telephone numberwith a geographic area. The geographic area may be a political boundary,or coordinates, such as longitude and latitude coordinates, or globalpositioning coordinates. The geographic area identified can then berelated to high risk or low risk areas.

An additional example of augmented data derived from a telephone numbercan include associating the given telephone number with a high riskentity, such as a person listed on an OFAC list.

In some embodiments, a subscriber 111 can access the RMC system 106 viaa computerized system as discussed more fully below. The subscriber caninput a description of a Hedge Fund, or other inquiry, such as the nameof a party associated with a Hedge Fund. In some instances, and inaccordance with applicable laws, other identifying information can alsobe input, such as a date of birth, a place of birth, a social securitynumber or other identifying number, or any other descriptiveinformation. The RMC system 106 can receive the identifying informationand perform a risk related inquiry or search on the aggregated data,including, if it is available, any scrubbed data.

In other embodiments, a subscriber 111 can utilize a computerizedproprietary risk management (PRM) system 112. The PRM system 112 canreceive an electronic feed from a RMC system 106 with updated data,including, if it is available, any scrubbed data. In addition, datamining results can also be transmitted to the PRM system 112 orperformed by the PRM system 112 for integration into the risk managementpractices provided by in-house by the subscriber.

Information entered by a subscriber into a PRM system 112 may beinformation gathered according to normal course of dealings with aparticular entity or as a result of a concerted investigation. Inaddition, since the PRM system 112 is proprietary and a subscriberresponsible for the information contained therein can control access tothe information contained therein, the PRM system 112 can includeinformation that is public or proprietary. If desired, informationentered into the PRM system 112 can be shared with a RMC system 106.Informational data can be shared, for example via an electronictransmission or transfer of electronic media. However, RMC system data108 may be subject to applicable local or national law and safeguardsshould be adhered to in order to avoid violation of such law throughdata sharing practices. In the event that a subscriber, or otherinterested party, discovers or suspects that a person or entity isinvolved in a fraudulent or otherwise illegal activity, the system canreport related information to an appropriate authority.

Generally, the functionality of a PRM 112 is equivalent to functionalityprovided by an RMC system 106, except that data stored in the PRM 112and access to the RPm 112 can be kept proprietary. For the remainder ofthis document, any reference to an RMC 106 can be considered to alsoinclude a PRM 112 unless otherwise specified.

The RMC system 106 can allow a Financial Institution, or othersubscriber, to screen Hedge Fund related entities with various duediligence checks on an efficient basis. An inquiry can be utilized toidentify Hedge Funds by principals involved, by investment style,performance, domicile or other criteria. It can also be useful indetermining if a Hedge Fund is for U.S. and non-U.S. investors; whethera Hedge Fund is a single manager fund or a fund of funds; detailsrelating to management style and underlying investments; or researchdetails of a fund. Details can also be included relating to fund riskand performance analytics.

A log or other stored history can be created by the RMC system 106and/or a PRM system 112, such that utilization of the system canmitigate adverse effects relating to a problematic account. Mitigationcan be accomplished by demonstrating to regulatory bodies, shareholders,news media and other interested parties that corporate governance isbeing addressed through tangible risk management processes.

One or more reports can also be generated which are related to one ormore risk variables searched by the RMC 106. In various embodiments, thereports can include informational data returned by a risk query, anyrelated informational artifacts, descriptions of informationalartifacts, risk quotients or other evaluations or summaries ofinformation resulting from any related RMC searches.

An inquiry can also be automatically generated from monitoringtransactions being conducted by a subscriber 111, or taking place withsystems under control of a subscriber. For example, an informationsystem can electronically scan transaction data for key words, entitynames, geographic locales, or other pertinent data relating to HedgeFunds. Programmable software can be utilized to formulate an inquiryaccording to a Hedge Fund name, partner name, sponsor name, managername, beneficiary name or other pertinent data and run the inquiryagainst a database maintained by the RMC server 210 or in a PRM server211. Other methods can include voice inquiries via a telephone or othervoice line, such as voice over internet, fax, electronic messaging, orother means of communication. An inquiry can also include direct inputinto a RMC system 106, such as through a graphical user interface (GUI)with input areas or prompts.

An inquiry can also be generated by filling in data in a GUI with fieldsor prompts. Prompts or other questions proffered by the RMC system 106can be according to predetermined data fields, or depend from previousinformation received. Information generally received, or received inresponse to the questions, can be input into the RMC system 106 fromwhich it can be utilized for real time risk assessment and generation ofa risk valuation, such as a risk quotient.

An alert list containing names and/or terms related to a Hedge Fund canalso be supplied to the RMC system 106 by a subscriber 111 or othersource. Each alert list can be customized and specific to a subscriber111. The RMC system 106 can continually monitor data in its database viaan alert inquiry with key word, fuzzy logic or other search algorithmsand transmit related informational data to the interested party. In thismanner, ongoing diligence can be conducted. In the event that newinformation is uncovered by the alert inquiry, the subscriber 111 can benotified. Appropriate action can be taken according to the informationuncovered.

The RMC system 106 can quantify risk due diligence by capturing andstoring a record of information received which can include, for example,informational data, copies of or a description of any artifacts and adescription of any actions taken relating to a Hedge Fund. Oncequantified, the due diligence data can be utilized for presentation, asappropriate, to regulatory bodies, shareholders, news media and/or otherinterested parties, such presentation may be useful to mitigate adverseeffects relating to a problematic transaction. The data can demonstratethat corporate governance is being addressed through tangible riskmanagement processes.

In some embodiments, a RMC database 108 can contain only informationcollected from publicly-available sources relevant for the detection andprevention of money laundering, fraud, corrupt practices, organizedcrime, activities subject to governmental sanctions or embargoes, orother similar activities that are the subject of national and/or globalregulation. A subscriber 111 can use the database to identify thepossibility that a risk subject associated with a Hedge Fund may beinvolved in illegal activities.

A subscriber 111 to the RMC system 106 can access the databaseelectronically and to receive relevant information electronically and,in specific circumstances, hard copy format. If requested, a RMC system106 provider can alert a subscriber 111 upon its receipt of new RMCsystem 106 entries concerning a previously screened individual. Asubscriber 111 will be permitted to access information in the RMC system106 in various ways, including, for example: system to system inquiresinvolving single or batch screening requests, individual inquiries(submitted electronically, by facsimile, or by phone) for smallerscreening requests, or through a web-based interface supporting anindividual look-up service. Generally, employees and vendors will not bepermitted to use or share to information about subscriber requestsunless such access is necessary to provide a requested product orservice or to fulfill legal obligations under prevailing law.

In some embodiments, a RMC system 106 can take any necessary steps so asnot to be regulated as a consumer reporting agency. Such steps mayinclude not collecting or permitting others to use information from theRMC database 108 to establish an individual's eligibility for consumercredit or insurance, other business transactions, or for employment orother Fair Credit Reporting Act (FCRA) covered purposes such aseligibility for a government benefit or license.

To satisfy the requirements of embodiments prohibiting use of the RMC106 for FCRA covered purposes, a subscription agreement can beestablished between the RMC system 106 provider and a subscriber 111which will create enforceable contractual provisions prohibiting the useof data from the RMC database 108 for such purposes. The operations ofthe RMC system 106 can be structured to minimize the risk that the RMCdatabase will be used to furnish consumer reports and therefore becomesubject to the FCRA.

Some embodiments can therefore include establishment of additionalpolicies and practices to avoid FCRA implications, such as, for example:the information in the RMC database can be collected only fromreputable, publicly available sources and not contain information fromconsumer reports; the RMC system 106 can collect and permit others touse the information only for the purpose of complying with regulatoryand legal obligations associated with the detection and prevention ofmoney laundering, fraud, corrupt practices, organized crime, activitiessubject to governmental sanctions or embargoes, or other illegalactivities that are the subject of national and/or global regulation.

The RMC system 106 can forego collection of and refuse to permit othersto use information from the database to establish an individual'seligibility for consumer credit or insurance, for employment or for anyother use contrary to any other restrictions FCRA may establish.Subscribers can be required to execute a licensing agreement that willlimit their use of the data to specified purposes, including, forexample, specifically that the subscriber 111 will not use theinformation to determine a consumer's eligibility for any credit,insurance, other business transaction or for employment or otherFCRA-covered purposes. Accordingly, some embodiments can require eachsubscriber 111 to certify that the subscriber 111 will use the data onlyfor such specified purposes, and to certify annually that the subscriber111 remains in compliance with its certification that the information isnot being used for any of the proscribed purposes.

A licensing agreement that can be utilized with some embodiments canalso require that subscribers 111 separately secure information fromnon-RMC system 106 sources to satisfy any need the subscriber has forinformation to be used in connection with the subscriber's determinationregarding a consumer's eligibility for credit, insurance, other businesstransactions, or employment or for other FCRA-covered purposes.

In another aspect, in some embodiments of a RMC system 106, a providercan utilize the RMC system 106 to provide services exclusively to otherFinancial Institutions or business entities, such that the RMC system106 provider will have neither “customers” nor “consumers” as thoseterms are defined in the Gramm-Leach—Bliley Act (GLBA) and therefore mayhave no notice or disclosure obligations under the GLBA. In addition, asubscriber's disclosure of the name of its customer to a RMC system 106may be permitted for institutional risk control and other purposes underthe GLBA. An RMC system 106 provider can be contractually obligated touse customer names received from a subscriber only for the purpose offulfilling that subscriber's request for information or for anotherpurpose permitted by the GLBA, ensuring that the Act's limits on re-useand re-disclosure are met.

In another embodiment, a RMC system 106 may allow dissemination ofdatabase information for purposes including: the prevention or detectionof crime; the apprehension or prosecution of offenders; or theassessment or collection of any tax or duty.

In still another aspect, a RMC system 106 can be structured to takeadvantage of the immunity from liability for libel and slander grantedby the Communications Decency Act (“CDA”) to providers of interactivecomputer services. Where its operations are not protected by the CDA, aRMC system 106 may be able to reduce its risk of liability fordefamation substantially by relying only upon information and artifactsprovided by official government sources and other reputable sources, andtaking particular care with defamatory information from unofficialsources. In addition the RMC system 106 provider can take reasonablesteps to assure itself of the information's accuracy, including insuringthat the source of the information is reputable.

The RMC system 106 can operate an interactive computer service as thatterm is defined in the CDA. The clearinghouse can therefore provide aninformation service and/or access software that enables computer accessby multiple users to a computer server. In some embodiments, if desired,a RMC system 106 provider can limit its employees or agents fromcreating or developing any of the content in the RMC database 108.Content be maintained unchanged except that the RMC system 106 canremove information from the database that it determines to be inaccurateor irrelevant.

Still other embodiments can incorporate a transmission of informationfrom the RMC database 108 that will be carefully structured such thatthe RMC system 106 will not provide “consumer reports” regulated by theFCRA. As such, the data may be limited by not relating to consumers, butrather to corporate entities. Data on consumers can be prevented fromidentifying them definitively, inasmuch as the individual named in apublic record may or may not be the individual who is the subject of aRMC search. Moreover, the RMC system 106 can forego collectinginformation in order to provide consumer reports, and also not use orhave a reasonable basis to expect that subscribers will use, any RMCdata 108 for FCRA covered purposes.

For example, in some embodiments, the RMC system 106 can limitcollection of data to that information that will be relevant for thedetection and prevention of money laundering, fraud, corrupt practices,organized crime, activities subject to governmental sanctions orembargoes, or other similar activity that is the subject of nationaland/or global regulation. The RMC system 106 can be limited tocollecting information for the RMC database 108 solely frompublicly-available sources, principally information from news media andinformation released to the public by government agencies, such asregulatory enforcement action notice and embargo, sanction andcriminal-wanted lists.

If desired, in order to help avoid implications with the FCRA, anembodiment can prevent data from including identifiers that would assurethe subscriber that the subject of the data is the same person as thesubject of the subscriber's inquiry. For example, while the data willtypically identify the subject by name, they often will not include asocial security number, photograph, postal address, or similarcomparatively definitive identification. As many people share identicalnames, a subscriber often will be unsure whether any or all of the datareceived relate to the person inquired about.

Referring now to FIG. 2, a network diagram illustrating one embodimentof the present invention is shown 200. An automated RMC 106 can includea computerized RMC server 210 accessible via a distributed network 201such as the Internet, or a private network. A Subscriber 111 or otherparty interested in Hedge Fund risk management, can use a computerizedsystem or network access device 204-207 to receive, input, transmit orview information processed in the RMC server 210. A protocol, such asthe transmission control protocol internet protocol (TCP/IP) can beutilized to provide consistency and reliability.

In addition, a PRMC server 211 can access the RMC server 210 via thenetwork 201 or via a direct link 209, such as a T1 line or other highspeed pipe. The RMC server 210 can in turn be accessed by a Subscriber111 via a system access device 204-207 and a distributed network 201,such as a local area network, or other private network, or even theInternet, if desired. A Subscriber 111 can also be situated to accessthe RMC server 210 directly, or any other system architecture conduciveto a particular need or situation. In some embodiments, a remoteSubscriber 111 can access the RMC server 210 via a system access device204-207 also used to access other services, such as resources availableon the Internet.

A computerized system or system access device 204-207 used to access theRMC server 210 or the PRM server 211 can include a processor, memory anda Subscriber 111 input device, such as a keyboard and/or mouse, and aSubscriber 111 output device, such as a display screen and/or printer.The system access devices 204-207 can communicate with the RMC server210 or the PRM server 211 to access data and programs stored at therespective servers 210-211. The system access device 204-207 mayinteract with one or more servers 210-211 as if the servers210-211 werea single entity in the network 200. However, the servers 210-211 mayinclude multiple processing and database sub-systems, such ascooperative or redundant processing and/or database servers that can begeographically dispersed throughout the network 200.

The PRM server 211 and the RMC server 210 include one or more databases202-203 storing data relating to proprietary risk management. The PRMserver 211 and the RMC server 210 may interact with and/or gather datafrom an operator of a system access device 204-207 or other source. Datareceived may be structured according to risk variables and utilized tocalculate a risk quotient.

Typically a Subscriber 111, will access the PRM server 211 or RMC server210 using client software executed at a system access device 204-207.The client software may include a generic hypertext markup language(HTML) browser, such as Netscape Navigator or Microsoft InternetExplorer, (a “WEB browser”). The client software may also be aproprietary browser, and/or other host access software. In some cases,an executable program, such as a Java™ program, may be downloaded from aserver 210-211 to the client computer and executed at the system accessdevice or computer as part of the RMC risk management software. Otherimplementations include proprietary software installed from a computerreadable medium, such as a CD ROM. The invention may therefore beimplemented in digital electronic circuitry, computer hardware,firmware, software, or in combinations of the above. Apparatus of theinvention may be implemented in a computer program product tangiblyembodied in a machine-readable storage device for execution by aprogrammable processor; and method steps of the invention may beperformed by a programmable processor executing a program ofinstructions to perform functions of the invention by operating on inputdata and generating output.

Referring now to FIG. 3, exemplary steps taken to manage risk associatedwith a Hedge Fund can include gathering data relating to risk the HedgeFund 310 and receiving the gathered information into a PRM server 211 orRMC server 210. Informational data can be gathered from an employee ofthe Hedge Fund, from a source of electronic data such as an externaldatabase, messaging system, news feed, government agency, from any otherautomated data provider, from a party to a transaction, or other source.Information can be received on an ongoing basis such that if new eventsoccur in the world that relate to a specified Hedge Fund, theinformation can be included in a risk calculation.

In addition to the information itself, a source of risk variable datacan also be received 311 by the RMC server. For example, a source ofrisk variable data may include a private investigator, a governmentagency, an investigation firm, public records, news reports,publications issued by Treasury's Financial Crimes Enforcement Network(“FinCEN”), the State Department, the CIA, the General AccountingOffice, Congress, the Financial Action Task Force (“FATF”), variousinternational financial institutions (such as the World Bank and theInternational Monetary Fund), the United Nations, other government andnon-government organizations, internet websites, news feeds, commercialdatabases, or other information sources.

The PRM server 211 or RMC server 210 can aggregate the data receivedaccording to risk variables 312 or according to another data structurewhich is conducive to fielding risk related to Hedge Funds.

A RMC server 210 can be accessed in real time, or on a transaction bytransaction basis. In a real time embodiment, any changes to the RMCdata 108 may be automatically forwarded to a system access device204-207 or an in-house PRM system 112. On a transaction by transactionbasis, the PRM system 112 can be queried for specific data that relatesto variables associated with a particular transaction.

All data received can be combined and aggregated 312 according to riskvariables to create an aggregate source of data which can be accessed toperform risk management activities. Combining data can be accomplishedby any known data manipulation method. For example, the data can bemaintained in separate tables and linked with relational linkages, orthe data can be gathered into on comprehensive table or other datastructure. In addition, if desired, information received can beassociated with one or more variables including a position held by asponsor or Hedge Fund partner, a country in which the fund is domiciled,how long a fund has been operating, the amount of leverage on the HedgeFund's assets, the veracity of previous dealings with persons associatedwith the Hedge Fund, the propensity of people associated with the HedgeFund to execute unlawful or unethical transactions, a type oftransaction that will involve the Hedge Fund, or other criteria.

In some embodiments, a certification package can be created relating toa particular Hedge Fund 313. A certification package can include a listof parameters for which an inquiry was executed. For example, parameterscan include all principals involved in a Hedge Fund. The parameters canbe researched and the results included in a certification package. Inaddition, research into any suspect practices or associations can alsobe conducted. A certification package can be standardized or subjectiveto a particular fund. The list of subjects researched can serve as anindicator of how comprehensive the research is that is being performed.

If desired, different levels of certification can also be madeavailable. For example a Level A certification may include high levelresearch and Levels B, C, and D may include increasingly more detailedresearch and a more comprehensive list of researched parameters. Otherexamples of Hedge Fund related parameters that can be part of one oranother certification level can include: a sponsor of a Hedge Fund, apartner of a Hedge Fund, a domicile of a Hedge Fund, an investment of aHedge Fund or investors in a Hedge Fund where applicable.

Still other embodiments can include generating a risk quotient for aHedge Fund based upon the certification research and weighted riskvariables 314. Generation of a risk quotient may have legal implicationspertaining to the FCRA or statutes regarding the sharing of information.Accordingly, a Hedge Fund risk quotient may be more suitably generatedon an in-house PRM system 112. However, a RDC system 106 can be madecapable of generating such a rating which can provide a ready Riskreference for a subscriber 111.

The RMC server 210 or PRM server 211 can receive an inquiry relating toa Hedge Fund 315. The inquiry from a subscriber 111, or other authorizedentity, can cause the respective servers 210-211 to search theaggregated data and associate related portions of aggregated data withHedge Fund 316. The associated portions of aggregated data can betransmitted 317 to a destination designated by the inquiry requestor,such as a system access device 204-207 or a PRM system 112, a faxmachine or a voice line.

The RMC server 210 may also receive a request for the source of anyassociated portions of aggregated data transmitted 318, in which case,the RMC server 210 can transmit the source of the associated portions ofaggregated data 319. The source may be useful in adding credibility tothe data, or to follow up with a request for additional information.

The RMC server 210 can also store in memory, or otherwise archive riskmanagement related data and proceedings 320. Archived risk managementrelated data and proceedings can be useful to quantify corporategovernance and diligent efforts to address high risk situations.Accordingly, reports quantifying RMC risk management risk managementprocedures, executed due diligence, corporate governance or othermatters can be generated 321.

Referring now to FIG. 4, the present invention can also include stepsthat allow a RMC server 210 or PRM server 211 to provide data augmentingfunctionality that allows for more accurate processing of data relatedto risk management. Accordingly, a RMC server 210 or PRM server 211 canaggregate risk variable related data 410 and a source of the riskvariable related data 411. The RMC server 210 or PRM server 211 canenhance risk variable related data, such as through data scrubbingtechniques or indexing as discussed above. A Hedge Fund description canalso be received 413 and scrubbed or otherwise enhanced 414.

An inquiry can be performed against the aggregated and enhanced data415. In addition, an augmented search that incorporates data miningtechniques 416 can also be included to further expand the depth ofknowledge retrieved by the inquiry. If desired, a new inquiry can beformed as a result of the augmented search. This process can continueuntil the inquiry and augmentation ceases to add any additionalmeaningful value.

As discussed above, any searching and augmentation can be archived 417and reports generated to quantify the due diligence efforts 418.

Referring now to FIG. 5, a flow chart illustrates steps that aSubscriber 111, such as a financial institution, can implement to managerisk associated with a Hedge Fund. The Subscriber 111 can receiveinformation descriptive of a Hedge Fund, such as an entity associatedwith the Hedge Fund 510. This information may be received during thenormal course of business, such as when a details of a transaction areascertained and it is discovered that the transaction will involve aHedge Fund. The Subscriber 111 can access a RMC server 210 or PRM server211 and identify to the server 210-211 one or more entities, partners,sponsors, managers, or other risk variables involved with the Hedge Fund511.

Access can be accomplished, for example, by opening a dialogue with aRMC system 211 with a network access device, 204-207, 204-207.Typically, the dialogue would be opened by presenting a GUI to a networkaccess device accessible by a person or an electronic feed that willenter information relating to the transactor. The GUI will be capable ofaccepting data input via a network access device. An example of a GUIwould include a series of questions relating to a transaction.Alternatively, information can be received directly into fields of adatabase, such as from a commercial data source. Questions can befielded during a transaction, or at any other opportunity to gatherinformation.

In some embodiments, automated monitoring software can run in thebackground of a normal transaction program and screen data traversing anapplication. The screened data can be processed to determine key wordswherein the key words can in turn be presented to the RMC server 210 asrisk subjects or risk variables. The RMC server 210 will process the keywords to identify entities or other risk variables. Monitoring softwarecan also be installed to screen data traversing a network orcommunications link.

The Subscriber 111 will receive back information relating to riskassociated with conducting a transaction involving the submitted subject512. The information can include enhanced data, such as scrubbed data.In some embodiments, a Subscriber 111 can receive ongoing monitoring ofkey words, identified entities, a geographic location, or other subject,or list of subjects. Any updated information or change of statusdetected via an ongoing monitoring can result in an alarm or other alertbeing sent to one or more appropriate Subscriber 111s.

The Subscriber 111 can also receive augmented information 513, such asdata that has been processed through data mining techniques discussedabove.

In addition to receiving augmented information 513, a Subscriber 111 canrequest an identifier, such as a link to a source of informationrelating to a Hedge Fund 514. Receipt of a link pertaining to a sourceof information 515 may be useful to pursue more details relating to theinformation, or may be utilized to help determine the credibility of theinformation received.

A Subscriber 111 can also cause an archive to be created relating toHedge Fund related risk management 516. An archive may include, forexample, information received relating to risk associated with a HedgeFund, inquiries made concerning the Hedge Fund and any results receivedrelating to an inquiry. In addition, the Subscriber 111 can cause a RMCserver 210 to generate reports to quantify the archived information andotherwise document diligent actions taken relating to risk management517.

A number of embodiments of the present invention have been described.Nevertheless, it will be understood that various modifications may bemade without departing from the spirit and scope of the invention. Forexample, a Hedge Fund can voluntarily provide information to a RMC 106in order to establish credentials that can be passed along to anysubscriber placing an inquiry related to the Hedge Fund. In addition, aninvestigation firm, auditing firm or other information provider can alsovoluntarily provide information to a RMC 106 which can bolster the imageof the information provider and also aid the subscriber 111.Accordingly, other embodiments are within the scope of the followingclaims.

1. A computer-implemented method for managing risk associated with aHedge Fund, the method comprising: gathering data relevant to a HedgeFund from multiple sources; aggregating the data gathered according torisk variables; receiving an inquiry relating to the Hedge Fund;associating portions of the aggregated data with the Hedge Fund; andtransmitting the portions of the aggregated data associated with theHedge Fund.
 2. The method of claim 1 wherein the gathered data isgathered exclusively from publicly available sources.
 3. The method ofclaim 1 wherein the inquiry comprises a sponsor of the Hedge Fund. 4.The method of claim 1 wherein the inquiry comprises a partner of a HedgeFund.
 5. The method of claim 1 wherein the inquiry comprises a domicileof the Hedge Fund.
 6. The method of claim 1 wherein the inquirycomprises investments made by the Hedge Fund.
 7. The method of claim 1wherein the inquiry comprises a commodity pool operator as defined inthe Commodity Exchange Act.
 8. The method of claim 1 whereintransmitting the associated portions of the aggregated data isconditioned upon receipt of the contractual obligation not to use theassociated portions of the aggregated data for any purpose covered bythe Fair Credit Reporting Act.
 9. The method of claim 1 wherein theinquiry relates to Hedge Fund window dressing.
 10. The method of claim 2wherein the associated portions of the aggregated data is transmittedexclusively to an institution, such that the transmitter will haveneither customers nor consumers as defined in the Gramm-Leach—BlileyAct.
 11. The method of claim 1 wherein transmitting the associatedportions of the aggregated data is conditioned upon receipt of acontractual obligation to limit use of the aggregated data for complyingwith regulatory and legal obligations associated with at least one of:(i) the detection and prevention of money laundering, (ii) fraud, (iii)corrupt practices, (iv) organized crime, and (v) activities subject togovernment sanctions or embargoes.
 12. The method of claim 1 whereintransmitting the associated portions of the aggregated data isconditioned upon receipt of a contractual obligation to limit use of theaggregated data for at least one of: (i) the prevention or detection ofa crime, (ii) the apprehension or prosecution of offenders, and (iii)the assessment or collection of a tax or duty.
 13. The method of claim 1wherein the inquiry relates to Hedge Fund portfolio pumping.
 14. Themethod of claim 1 wherein the gathered data relevant to a Hedge Fundaccurately reports on or consists of a governmental record.
 15. Themethod of claim 1 additionally comprising the step of insuring that thesource of gathered data is reputable.
 16. The method of claim 1 whereinthe inquiry comprises to a lockup provision.
 17. The method of claim 1wherein the inquiry relating to a Hedge Fund comprises an alert list.18. The method of claim 1 additionally comprising the steps ofcontinually monitoring the aggregated data and transmitting any newinformation related the Hedge Fund.
 19. A computer-implemented methodfor managing risk, the method comprising: gathering data relevant to aHedge Fund from multiple sources; aggregating the data gatheredaccording to risk variables; receiving an inquiry relating to the HedgeFund; associating portions of the aggregated data with the Hedge Fund;and transmitting the portions of the aggregated data associated with theHedge Fund.
 20. The method of claim 19 additionally comprising the stepof enhancing the gathered data.
 21. The method of claim 20 additionallycomprising the step of enhancing the data relevant to a Hedge Fund. 22.The method of claim 21 wherein enhancing the data comprises scrubbingthe data to incorporate changes in the spelling of datum.
 23. The methodof claim 21 wherein enhancing the data comprises utilization of an indexfile.
 24. The method of claim 19 additionally comprising the step ofaugmenting the associated portions of aggregated data.
 25. The method ofclaim 24 wherein augmenting the data comprises data mining.
 26. Themethod of claim 19 wherein associating portions of aggregated datacomprises Boolean logic.
 27. The method of claim 19 wherein associatingportions of aggregated data comprises relevance ranking.
 28. The methodof claim 19 additionally comprising the steps of receiving a source ofgathered data and transmitting the source of the associated portions ofaggregated data.
 29. A computerized system for managing risk, the systemcomprising: a computer server accessible with a system access device viaa communications network; and executable software stored on the serverand executable on demand, the software operative with the server tocause the system to: gather data relevant to a Hedge Fund from multiplesources; aggregate the data gathered according to risk variables;receive an inquiry relating to the Hedge Fund; associate portions of theaggregated data with the Hedge Fund; and transmit the portions of theaggregated data associated with the Hedge Fund.
 30. The computerizedsystem of claim 29 wherein the data is gathered via an electronic feed.31. Computer executable program code residing on a computer-readablemedium, the program code comprising instructions for causing thecomputer to: gather data related from publicly available sources;aggregate the data gathered according to risk variables; receive aninquiry relating to a risk subject; associate portions of the aggregateddata with the risk subject; and transmit the associated portions of theaggregated data.
 32. A computer data signal embodied in a digital datastream comprising data relating to risk management, wherein the computerdata signal is generated by a method comprising the steps of: gatheringdata from multiple sources; aggregating the data gathered according torisk variables; receiving an inquiry relating to a risk subject;associating portions of the aggregated data with the risk subject; andtransmitting the associated portions of the aggregated data.
 33. Amethod of interacting with a network access device so as to manage riskrelating to a risk subject, the method comprising the steps of:initiating interaction with a risk management server via acommunications network; inputting information descriptive of a HedgeFund; transmitting the information descriptive of a Hedge Fund to a riskmanagement clearinghouse server; and and receiving data associated withrisk variables that relate to the Hedge Fund.
 34. The method of claim 33wherein the data received comprises data resultant to data mining.
 35. Acomputer-implemented method for managing risk associated with a HedgeFund, the method comprising: gathering data relevant to a Hedge Fundfrom multiple sources; aggregating the data gathered according to riskvariables; performing a certification inquiry relating to the HedgeFund; associating portions of the aggregated data with certificationparameters relating to the Hedge Fund; receiving an inquiry relating tothe certification of the Hedge Fund; transmitting parameters of thecertification inquiry; and transmitting the portions of the aggregateddata associated with the parameters of the certification.
 36. Thecomputer-implemented method for managing risk associated claim 35additionally comprising the step of generating a risk quotient relatingto the Hedge Fund.